Province loses appeal over highway contract renewal price
New Brunswick’s top court orders Crown corporation to pay an additional $7,500 in costs to MRDC Highway Corp.
The Crown corporation that oversees the privately constructed and maintained highway between Fredericton and Moncton has once again lost its bid to challenge the contract renewal price.
The New Brunswick Highway Corp. (NBHC) launched a court case in 2020 in the Court of King’s Bench to challenge the contract renewal price set by an arbitration panel for the final third of a contract with the MRDC Operations Corp.
MRDC constructed the twinned highway between Fredericton and Moncton in the mid 1990s, and the Crown corporation entered into a 30-year contract for the maintenance of the key piece of New Brunswick transportation infrastructure.
The contract noted that MRDC would be paid $172 million for the first 20 years of the deal, with the final 10 years, from 2018 to 2028, to be negotiated.
Because NBHC and MRDC were so far apart on the renewal price - $165 million versus $400 million - the matter went to arbitration, as per the provisions in the contract.
The arbitration panel decided the fair renewal price would be $317.5 million, including costs and interest, but NBHC turned to the courts to challenge it.
But in a decision issued last summer, King’s Bench Chief Justice Tracey DeWare found the arbitration panel made no errors of law and that as per the contract, the Crown corporation didn’t have an automatic right to appeal the panel’s decision.
She dismissed the province’s appeal and ordered it to pay $5,000 in costs to MRDC Operations Corp
‘The motion judge did not err’
The NBHC took its case to the New Brunswick Court of Appeal, and its lawyers and counsel for MRDC argued the appeal last November.
But that further effort on the province’s part to shave millions off the highway contract renewal price has proven fruitless as well.
In a decision issued Thursday, Court of Appeal Justice Kathleen Quigg, as concurred by the two other judges on the appeal panel, found that DeWare assessed the issues raised in the motions properly.
“I conclude the motion judge did not err in dismissing the motions,” the appeal judge wrote.
“I discern no errors that would justify appellate intervention and would therefore dismiss the appeal with costs in the amount of $7,500.”
Quigg wrote that interpreting a contract requires consideration of the context in which the agreement was reached.
”It is also a fundamental principle of contractual interpretation that contracts must be interpreted in accordance with sound commercial principles and good business sense,” she wrote.
“In my view, applying these principles of contractual interpretation to Section 24.7 of the… agreement confirms that the parties intended there be no right to appeal an arbitral award relating to the renewal price, except on questions of law with leave of the court.”
DeWare and Quigg both found such questions of law weren’t in play in this case.
Tolls were supposed to pay for highway
The Court of Appeal decision confirms for a third time the province will be on the hook for about $150 million in excess of the amount it wanted to pay for the final years of the highway contract.
The Department of Transportation and Infrastructure didn’t respond to a request for comment Thursday afternoon.
The private constructed highway - the largest infrastructure project in the province’s history - wasn’t supposed to cost New Brunswick taxpayers anything.
When the project was undertaken in 1998, the MRDC Operations Corp. was going to be paid by way of tolls collected on the Fredericton-to-Moncton artery in a deal negotiated by the Liberal government of the day.
However, those tolls became a key issue in the 1999 provincial election campaign, and Bernard Lord, as the new leader of the Progressive Conservatives at the time, pledged to do away with them.
The Tories won that election, and Lord tossed the toll plan in 2000. But that required his government to negotiate a new deal with MRDC, giving rise to the 30-year contract and the renewal process being disputed by a new Progressive Conservative government.
The highway officially opened Oct. 23, 2001.
Don MacPherson can be contacted at ftonindependent@gmail.com.
As a user of a portion of this highway on a regular basis, I was disappointed to read this article. This section of highway is poorly maintained and in deplorable condition. I can’t fathom where the $$ is going - it’s certainly not to maintain the highway.
Surely in this multi year contract there are highway safety and engineering standards to which MRDC must maintain the highway. If they are receiving this much taxpayer $$, hold their feet to the fire!